Beginners Guide to Crypto Metrics
The Evolution of Financial Transactions
Beginners Guide to Crypto Metrics
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The Evolution of Financial Transactions
Crypto is not a singular entity but rather a dynamic technology that encompasses multiple companies and organizations.
Examples like Bitcoin, Ethereum, Polygon, CosmosHub (ATOM), Solana, Mina Protocol, Binance Smart Chain, Aptos, and many others all share the same foundational principles of decentralization and cryptographic security.
However, they also exhibit notable differences in terms of their functionalities and features. Bitcoin pioneered decentralized digital currency, while Ethereum introduced smart contracts and decentralized applications. Projects like Polygon and Solana focus on scalability solutions, while CosmosHub (ATOM) aims to connect different blockchains. The diverse range of crypto projects showcases the innovation and potential of this rapidly evolving technology.
When evaluating cryptocurrencies, several metrics come into play. Considering these metrics helps gain a comprehensive understanding of different cryptocurrencies and their suitability for various use cases.
However, they also exhibit notable differences in terms of their functionalities and features. Bitcoin pioneered decentralized digital currency, while Ethereum introduced smart contracts and decentralized applications. Projects like Polygon and Solana focus on scalability solutions, while CosmosHub (ATOM) aims to connect different blockchains. The diverse range of crypto projects showcases the innovation and potential of this rapidly evolving technology.
When evaluating cryptocurrencies, several metrics come into play. Considering these metrics helps gain a comprehensive understanding of different cryptocurrencies and their suitability for various use cases.
Cost of transaction
The cost of transactions is a critical consideration when it comes to the adoption of cryptocurrencies. Lower fees play a significant role in attracting users and encouraging broader usage. High transaction fees can deter individuals and businesses from utilizing cryptocurrencies as a means of payment. By keeping transaction costs low, cryptocurrencies can foster wider adoption and appeal to a larger audience. This affordability factor is essential in establishing digital currencies as a viable and practical alternative to traditional financial systems.
The cost of transactions depends not only directly on the token exchange rate but also on the technology. Here is a list of websites where you can check that metric:
Security
Privacy characteristics are a crucial metric in the evaluation of cryptocurrencies. Privacy-focused coins incorporate encryption techniques, zero-knowledge proofs, or ring signatures to provide users with enhanced anonymity and transactional privacy, catering to those who value confidentiality in their financial activities.
Active users
Active users refers to the number of individuals or entities actively utilizing a specific cryptocurrency or participating in related activities within a given time period. As of 2023, the global cryptocurrency ownership rates are estimated to average around 4.2%, indicating a significant presence of over 420 million cryptocurrency users worldwide.
Top 10 countries by cryptocurrency ownership
Market capitalizarion & volume (24h)
Market capitalization refers to the total value of a cryptocurrency, calculated by multiplying its current price by the total circulating supply. It provides a snapshot of the cryptocurrency's overall worth in the market.
The 24-hour trading volume represents the total value of a cryptocurrency traded within the past day, indicating the level of liquidity and investor interest.
Some cryptocurrencies serve as a means of payment for transactions within certain networks. Therefore, when choosing a network, it is important not to ignore the investment attractiveness of the coin for users, as there is a direct correlation with the size of the audience.
You can check the capitalization metric on coingecko.com
The 24-hour trading volume represents the total value of a cryptocurrency traded within the past day, indicating the level of liquidity and investor interest.
Some cryptocurrencies serve as a means of payment for transactions within certain networks. Therefore, when choosing a network, it is important not to ignore the investment attractiveness of the coin for users, as there is a direct correlation with the size of the audience.
You can check the capitalization metric on coingecko.com
Audience
Also cryptocurrencies differ in terms of their user base, with different digital assets often attracting specific groups of users based on their features, intended use cases, and target audience. Here are a few examples of cryptocurrencies and the types of users commonly associated with them:
1
Bitcoin (BTC)
Being the first and most well-known cryptocurrency, has a diverse user base. It appeals to individuals interested in decentralized digital currency, including early adopters, tech enthusiasts, investors, and those seeking an alternative store
Being the first and most well-known cryptocurrency, has a diverse user base. It appeals to individuals interested in decentralized digital currency, including early adopters, tech enthusiasts, investors, and those seeking an alternative store
2
Ethereum (ETH)
Blockchain platform that enables the creation of smart contracts and decentralized applications (dApps). It attracts developers and entrepreneurs looking to build and deploy their own applications on the Ethereum network
Blockchain platform that enables the creation of smart contracts and decentralized applications (dApps). It attracts developers and entrepreneurs looking to build and deploy their own applications on the Ethereum network
3
Ripple (XRP)
Digital payment protocol designed for fast, low-cost international money transfers. Its users often include financial institutions and businesses that require efficient cross-border transactions.
Digital payment protocol designed for fast, low-cost international money transfers. Its users often include financial institutions and businesses that require efficient cross-border transactions.
Another less obvious way to assess the audience is through the number of followers on Twitter for prominent figures like Vitalik Buterin (Ethereum), Anatoly Yakovenko (Solana), the Cosmos project, and others.
TVL
Total Value Locked indicates the total value of assets locked within a specific protocol or platform. It provides insights into the overall adoption and popularity of DeFi projects in the crypto ecosystem.
You can check the metric on defillama.com
You can check the metric on defillama.com
Activity
The number of transaction activity metric in cryptocurrency refers to the quantity of transactions occurring within a specific blockchain network. It provides insights into the level of engagement and usage of the cryptocurrency, reflecting the overall transactional activity and liquidity of the digital asset.
You can find it on l2beat.com
You can find it on l2beat.com
Confused about cryptocurrency metrics? We're here to assist! Choosing the right technology is not an easy task, it is necessary to take into account and understand many factors. Please feel free to get in touch with us. We are here to assist you and provide any help you may need.
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